This paper estimates the economic value of the vegetation restoration in Lake Kasumi-gaura in Japan. This is the first application of choice experiments to valuation of gene
diversity, hence this represents a significant contribution to the economic valuation lit-erature. We observe a positive willingness to pay for the vegetation restoration project.
The willingness to pay for restoring the endangered species Asaza (Nymphoides peltata) to avoidable level is the greatest. In addition, we compare the estimation results of sev-eral econometric models including conditional logit, nested logit and random parameter logit. According to model fitting, we obtain the same conclusion as the previous studies.
That is, random parameter logit is more desirable than nested logit and at the same time, nested logit is more desirable than conditional logit. According to the t-test in the standard deviation of utility parameters and LR (likelihood-ratio) test comparing to conditional logit, it is obvious that utility parameters vary across individuals. In other words, there exists significant heterogeneity in the public preferences for the vegetation restoration. Interestingly, the results also indicate that the possibility of the extinction has a positive effect on the magnitude of the preference heterogeneity, implying a decrease in endangered risk (an increase in the gene diversity) makes consensus easier to reach.
Although the results provide insightful policy implications, we should note that these estimates are obtained based on hypothetical statements. For instance, comparing the current membership fee which is actually paid 2000 yen per share to the Nonprofit Or-ganization Asaza Fund, it might seem that the respondents whose estimated willingness to pay are much higher than the fee are highly concerned with the restoration project in Lake Kasumigaura. However, the willingness to pay estimated from hypothetical pay-ments might have no connection to whether or not the respondent would actually like to pay the membership fee to the fund. The relationship between hypothetical payments and actual payments will be explored in future research.
Chapter 3
Using Choice Experiments to
Value a Shallow Lake Ecosystem and Capture the Preference
Heterogeneity
3.1 Introduction
Since the Law for the Promotion of Nature Restoration in Japan took effect 2003, the nature restoration project has been watched nationwide. In Kushiro mire which has been the leader of this project, the Ecosystem Restoration Strategy for Kushiro Mire was for-mulated in 2005. As these nature restoration projects are about to start in different areas, it has became important to understand public preferences for the ecosystem restoration.
Using choice experiments, this paper estimates the economic impact of the ecosystem restoration in Lake Takkobu which is one district of pilot projects in Kushiro wetland.
First, we evaluate total economic value including non-use value. Lakes and wetlands are productive ecosystems, providing various services ranging from flood and flow control to water quality maintenance, biodiversity, and recreational benefits. These services will
include one of the most important non-use values which consist of bequest and existence values (Branderet al., 2006). The ecosystem restoration will need to be evaluated before projects because the ecosystem deterioration is probably irreversible. Since it is necessary to capture the economic value which is not revealed in actual demand behavior when valuing the ecosystem restoration, the stated preference methods which have such features are attracting attention worldwide (Lupiet al., 2002; Wilson and Carpenter, 1999).
Second, we conduct multi-attribute and multi-level valuation based on ecological eval-uation. Evaluation criteria from ecological viewpoints such as ecosystem functions or biodiversity are multiple and complicated (Brander et al., 2006). In addition, when con-ducting ecosystem restoration, it is crucial for the government and local resident to set the restoration goal. Depending on the restoration goals, conflicts often occur in value, because the restoration goals can have an influence on local industries or recreational use as well as restoration cost. Then, on determining the restoration goal, economic valua-tion will become an important roll, because it can evaluate the benefit which ecosystem restoration to each goal brings to the public (Kikeret al., 2001). From these viewpoints, we conclude that choice experiments, which enable to conduct attribute and multi-level valuation, would be the most appropriate method to value the ecosystem restoration project.
Third, we estimate the values of ecosystem restoration with taking into account het-erogeneity in the preferences for the public. Preferences for environmental conservation can vary across individuals and groups. Some people may have a great interest in natural environment, while others are completely unconcerned about it. Several previous stud-ies which deal with wetland valuation indicate that respondent’s preferences for wetland restoration and management vary across individuals and groups (Carlsson et al., 2003;
Milon and Scrogin, 2006; Birol et al., 2006). As these previous studies show, if people’s preferences to conserve and use natural environment are heterogeneous, there can be a possibility that interests conflict between people or groups in regards to nature restora-tion. Then, when we consider the implementation of nature restoration, understanding the preference heterogeneity becomes critical from the viewpoint of the consensus build-ing.
With this discussion in mind, this paper aims to examine the evaluation model which can assist policy makers in implementing ecosystem restoration by providing results of a valuation study on Lake Takkobu in Kushiro mire in Japan. In particular, this paper designs choice experiments based on ecological evaluation criteria and data, and tries to explain the cause and the presence of the preference heterogeneity.
First, based on ecological study, we evaluate the benefits that the ecosystem restora-tion in Lake Takkobu brings to Hokkaido residents. Second, the random parameter logit (RPL) analysis clarifies that there exists heterogeneous preferences for ecosystem restora-tion in Lake Takkobu among individuals in Hokkaido. Third, the latent segment logit (LSL) analysis identifies that there exist two homogeneous groups in the Hokkaido sam-ple: one values a recreational use in Lake Takkobu and the other values the ecosystem restoration. The analysis also shows that the heterogeneity attributes to psychomet-ric variables and socio-economic variables such as respondent’s environmental attitude and residence. Forth, comparing Hokkaido sample with nationwide sample, we find that the preferences for some attributes including the restoration of biodiversity are different between Hokkaido citizens and nationwide citizens.
The paper is organized as follows. The next section gives a brief review of the pre-vious literature on wetland ecosystem valuation. Section 3.3 presents findings which are obtained from ecological studies and demonstrates restoration scenarios to be valued in this paper. Section 3.4 introduces our survey design and implementation. Section 3.5 describes our estimation models: random parameter logit and latent segment logit. In section 3.6, we show estimation results from econometric analysis and discuss preference heterogeneity and beneficiary area. We conclude with a summary of the analysis and policy implications for implementing ecosystem restoration in Lake Takkobu.